RISK MITIGATION: What are Updates & Proposals on Risk Mitigation Products?

Product Name Commercial Cofinancing - Complementary Financing Scheme
Link to Product Website
Provider Name ADB (Asian Development Bank)
Product Definition Complementary Financing Scheme (CFS) Benefits:

ADB acts as the lender of record without recourse for CFS loans. These loans are presold to commercial lenders. It should be noted that the CFS is used solely to facilitate commercial cofinancing for ADB-assisted private sector projects.

Since ADB is the lender of record, the CFS loans receive the benefit of ADB's preferential status and certain privileges and immunities, including:

1. exemption from any restrictions on currency conversion and on the remittance of interest and repatriation of principal,
2. exemption from withholding tax,
3. reduced likelihood of rescheduling in the event of an external debt crisis in the borrowing country,
4. exemption from special debt provisioning requirements in some countries, and
5. benefits from linking the complementary loan with ADB's direct loan through an optional cross-default clause.

Other benefits include ADB's:

1. project appraisal
2. supervision of project implementation
3. loan administration services

In administering the CFS loans, ADB acts as a channel for disbursements and debt service payments.

Maturities:

The maturities of CFS loans on a project finance basis have typically ranged from 7 to 8 years for industrial and manufacturing projects, and from 10 to 12 years for build-own-operate and build-operate-transfer (BOO/BOT) infrastructure projects.

Eligible Co-financiers:

Any reputable commercial financial institution operating on a commercial basis is eligible as a CFS lender, except those institutions whose head office is registered in the same country as the project.

Administration:

As lender-of-record, ADB administers CFS loans on behalf of the participating CFS lenders with the same standard of care it exercises in respect of loans for its own account. In matters of critical importance to CFS lenders, ADB does not act unilaterally, but instead seeks the lenders' views and consent prior to taking action, as specified in the participation agreement.

Product Type Co-financing
Defined Risks Covered n.a.
Eligible Form of Investments Bank Loans
More on Eligible Investments
Eligible Currency of Underlying Investment Covered by this Product Both local and foreign currency
Eligible Countries & Regions n.a.
More on Eligible Countries
Eligible Applicants MIXED (PUBLIC-PRIVATE): Private Joint Ventures (51% or more private-owned)
PRIVATE: All
More on Eligible Applicants
Eligible Sector No Specific Sector
Maximum Tenor 10+ to 15 years
More on Maximum Tenor
Max. Absolute Amount (USD) Over 350+ MM
Max. % of Project Costs Covered 100%
Max. % of Export Content Covered Over 85+%
Fees Market-based
Arrangement: 75-100 basis points on the amount of the CFS loan, with a minimum of $20,000

Administration: $5,000 per participating CFS lender per annum, with a maximum of $20,000 per annum
More on Fees

Other Conditions Sovereign Counterguarantee: No
Anti-Corruption and Governance Standards: Yes link
Environmental standards: Yes link
Social standards (incl. Human Rights Standards; Labor Rights Standards): Yes link
Others: ADB Operational Policies
More on Other Standards
Source(s) n.a.
For more information, contact Christine Engstrom
Director - Financial Institutions Division (PSFI), ADB
Phone: +632 632 6675
Attachments n.a.
Additional Links n.a.
Deals n.a.

Provider Name ADB (Asian Development Bank)
Institution Type PUBLIC: Multilateral Development Bank
Ownership Owned by 65 members (47 from Asia Pacific Region)
Head Office Headquarters: 6 ADB Avenue, Mandaluyong City 1550, Metro Manila, Philippines
Provider Home Country Philippines
Rating AAA
Main Risk Mitigation Products Partial Credit Guarantees
Loan Syndication
Risk Participations
Partial Risk Guarantee
Attachments n.a.
Additional Links www.adb.org/site/private-sector-financing/commercial-cofinancing
www.adb.org/projects
www.adb.org/news
www.adb.org/data/main
Entered On: 06/29/2007 at 12:55 PM
Updated On: 05/07/2013 at 08:38 AM